The Brazilian president, Luiz Inácio Lula da Silva, criticized this Thursday the predominant use of the dollar in global trade and accused the International Monetary Fund of “suffocating” economies such as Argentina, on the first day of his trip to China.
The Brazilian President, Luiz Inacio Lula da Silva, He criticized this Thursday the predominant use of the dollar in global trade and accused the International Monetary Fund of “suffocating” economies like Argentina, on the first day of his trip to China.
The leftist leader, whose government recently announced an agreement with Beijing to trade its own currencies – leaving aside the dollar as an intermediary – is in China to boost economic ties with Brazil’s main trading partner and affirm that his country “is back” to the international scene.
«Why are all countries obliged to do their trade tied to the dollar? (…) Who decided that the dollar would be the (global) currency?” Lula said when participating in the inauguration of former Brazilian president Dilma Rousseff (2011-2016) at the head of the BRICS bank (Brazil, China, India, Russia and South Africa).
“Today a country needs to run after the dollar when it could export in its own currency” (…) Why can’t a bank like the BRICS have a currency that can finance the trade relationship between Brazil and China, between Brazil and other BRICS countries?”, added the President of Brazil.
Nigel Chalk, deputy director of the IMF’s Department for the Americas, ruled out that there is a “grand plan behind this, if not it is more like a result determined by the market,” at a press conference on the occasion of the publication of the new outlook for growth for Latin America and the Caribbean.
“For a currency to be usable, both in trade and finance, there must be a lot of institutional underpinnings behind it” such as a strong financial market and availability of funds, he added, saying that once you have it is “very It’s hard to get away from that ecosystem because you have to create a lot of support structures to get away.”
But “it’s not impossible to do, it’s doable,” he added, citing the Chinese renminbi as an example.
Lula also launched harsh questions against the IMF alluding to accusations that the Washington-based institution imposes draconian cuts in public spending in troubled countries like Argentina in exchange for loans.
* Also read: Lula visits China to boost Sino-Brazilian relations
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